International investors flock to Saudi Arabia’s expanding VC market in 2024  

Aligned with its economic diversification strategy, the Kingdom has prioritized startups and VC investments as pivotal components of its transformation under Vision 2030. Shutterstock
Short Url
Updated 01 January 2025
Follow

International investors flock to Saudi Arabia’s expanding VC market in 2024  

RIYADH: Saudi Arabia’s venture capital ecosystem showed remarkable growth in 2024, driven by robust government support, an influx of international investors, and a maturing entrepreneurial scene, according to industry experts.   

Aligned with its economic diversification strategy, the Kingdom has prioritized startups and VC investments as pivotal components of its transformation under Vision 2030.   

In an interview with Arab News, Philip Bahoshy, CEO and founder of MAGNiTT, a leading regional data platform, emphasized the importance of government-backed programs in fostering this growth, ensuring the ecosystem’s continued expansion in 2025 and beyond.




Philip Bahoshy, CEO and founder of MAGNiTT. Supplied

 

“Saudi Arabia continued to develop its venture ecosystem throughout 2024. This was seen through multiple government programs and initiatives driven by the Ministry of Communications and Information Technology and the National Technology Development Program, as well as training programs and investment structures through Jada Fund of Funds and SVC,” Bahoshy said.   

He also pointed out that the data indicates Saudi Arabia’s increasing competitiveness in terms of funding, especially when compared to other regional markets.  

Mohammed Al-Zubi, founder of Nama Ventures, one of Saudi Arabia’s top early-stage VC firms, echoed these sentiments, noting the alignment between Vision 2030 and the Kingdom’s growing momentum in the sector.  

“Three key factors stood out. First, the continued support from Vision 2030 initiatives, which provided both infrastructure and funding incentives to startups and investors. Second, the influx of international investors who recognize the untapped potential in the Saudi market,” Al-Zubi told Arab News.  




Mohammed Al-Zubi, founder of Nama Ventures. Supplied

“Finally, we saw at Nama that the entrepreneurial talent pool in Saudi Arabia has grown exponentially, with founders becoming more sophisticated in their approach to building scalable businesses,” Al-Zubi added.  

A resilient VC market  

Despite global economic challenges and a slowdown in late-stage investments, Saudi Arabia’s VC market proved resilient, outpacing many developed markets.  

“2024 showcased Saudi Arabia as one of the most dynamic and interesting VC markets globally,” said Al-Zubi. 

He observed that, while global VC investments saw significant declines, Saudi Arabia experienced only a “below-average decline,” thanks to targeted initiatives aimed at building a sustainable entrepreneurial ecosystem.  

Bahoshy also noted the strength of early-stage and Series A investments, which formed the backbone of the Kingdom’s venture capital activity.  

“Venture investment in the Kingdom remained strong at early and series A investments. Late-stage investment globally and in the region has been the hardest hit by the slowdown in venture,” he explained.  

One of the standout trends in Saudi Arabia’s 2024 venture capital market was the explosive growth in early-stage investments, which, according to Al-Zubi, accounted for approximately 85 percent of all VC deals. 

He emphasized that such investments are crucial for laying a solid foundation for the ecosystem.  

Bahoshy also highlighted this trend, noting that “investor appetite at the early stage was notable, driving an increase in the total number of transactions year on year.”   

Success stories 

Saudi Arabia’s VC growth in 2024 was marked by key success stories, reflecting the strength and global appeal of the local startup ecosystem.  

Bahoshy pointed to Tabby, a buy-now-pay-later fintech unicorn, as one of the standout successes. “Now headquartered in Saudi Arabia, Tabby is preparing for its initial public offering, likely on Tadawul, though the IPO date is yet to be announced.”  

“The company reached unicorn status last year with a valuation exceeding $1.5 billion after raising $200 million in a Series D funding round. This year it continued its expansion into the Kingdom through the acquisition of Tweeq, moving beyond just BNPL but into other financial services,” he said.  

Al-Zubi pointed to Salla, an e-commerce platform backed by Nama Ventures, as another success story.  

“Salla’s journey in 2024 is a prime example of the transformative power of early-stage VC. Nama Ventures invested in Salla during its earliest stages, and the company is now on the brink of unicorn status and preparing for an IPO. This year, Salla secured a $130 million pre-IPO investment round, partnered with stc Bank, and launched the Salla Special plan to empower businesses with advanced capabilities,” Al-Zubi explained. 

Other Nama Ventures portfolio companies, such as Cargoz and Nowlun, are also leveraging opportunities in the Saudi market.  

“Beyond Salla, other Nama Ventures portfolio companies, such as Cargoz and Nowlun, are expanding their footprints into Saudi Arabia — a testament to the ecosystem’s vibrancy and the opportunities it offers for regional growth,” Al-Zubi added. 

Global engagement 

Discussing the factors driving VC investments into Saudi Arabia, Bahoshy emphasized the Kingdom’s strategic vision as a key attraction for international capital.  

“Saudi Arabia, in line with Vision 2030, continues to attract international and regional interest into the Kingdom. In 2024, we saw notable relocation of companies to the Kingdom for their headquarters as well as international VC entities from the US and Asia setting up offices in the Kingdom as they attract global capital,” he stated.   

“This has led to the support of venture investment in the Kingdom locally and attracting regional and international startups to the Kingdom,” Bahoshy said.  

This surge in international engagement was further bolstered by various government support programs.   

“This was complemented by government support programs driven by the likes of MCIT, multiple accelerator programs focused on the top of the funnel like Flat6Labs, 500 Global and Sanabil, as well as Fund of Fund programs to not only invest in the capital allocators, but also to train them through structured programs and academic efforts,” he added.  

Global events hosted in Saudi Arabia, such as the Future Investment Initiative and LEAP, played a pivotal role in boosting the Kingdom’s international profile.  

“These events have positioned Saudi Arabia as a global hub for innovation and entrepreneurship, attracting attention from leading international venture capitalists,” said Al-Zubi.    

Emerging trends 

Saudi Arabia’s VC ecosystem has expanded beyond traditional sectors like fintech and e-commerce, branching into emerging industries such as IT solutions, food and beverage, and agriculture.  

Bahoshy pointed to Intelmatix’s $20 million Series A round and AI Menu’s $10 million funding as examples of this diversification.   

“In 2024, Saudi Arabia’s VC space saw notable activity beyond the usual leading sectors of fintech, e-commerce, retail, and transport and logistics,” Bahoshy said.  

Al-Zubi noted another key trend — the rise of sector-specific funds led by seasoned entrepreneurs.   

“These individuals leveraged their expertise and capital to establish highly focused funds in areas such as fintech, health tech, and logistics,” he observed.  

He believes this trend will continue into 2025, with more seasoned founders transitioning into investors and further strengthening the ecosystem.   

2025 Outlook  

Both Bahoshy and Al-Zubi are optimistic about the future of Saudi Arabia’s VC market in 2025.  

Bahoshy highlighted IPO readiness as a critical focus for the coming year. “Much discussion and preparation have been in place to see more IPO listings in the Kingdom. This is likely to transpire in 2025; however, a lot of groundwork in preparing companies to be ‘IPO’ ready has been a catalyst to the venture market,” he said.  

Al-Zubi forecasted growth in both early- and later-stage investments. “I foresee a continued shift toward larger, later-stage investments as more startups reach maturity.”  

“Simultaneously, the emphasis on early-stage investments will grow exponentially, driven by the recognition that nurturing startups from their inception is critical to building a pipeline of scalable ventures,” he added.  

Al-Zubi also anticipates continued momentum in pre-seed and seed funding, along with mentorship initiatives aimed at supporting emerging founders.  

Bahoshy pointed to deep technology investment as another promising area. “In the ever-evolving Saudi Arabia ecosystem, it is also important to note that the foundations are being set for deep technology investment,” he said, referencing the efforts of institutions like KAUST, government programs such as MCIT, and international roadshows in regions like Singapore, South Korea, and London.  

“This is an area to watch out for heading into 2025 as the AI interest globally looks to translate to venture investment in the Kingdom,” he added. 


Habib Bank, S&P Global launch Pakistan’s first index to track manufacturing sector

Updated 14 February 2025
Follow

Habib Bank, S&P Global launch Pakistan’s first index to track manufacturing sector

  • The index will be a standardized economic indicator based on a survey of a diverse panel of industries
  • It will help track economic developments in Pakistan, support decision making by financial institutions

ISLAMABAD: Pakistan’s largest bank, Habib Bank Limited (HBL), and global financial information and analytics firm S&P Global have launched a new index to track the country’s manufacturing sector, the companies said on Friday.
Rising taxes and power tariffs have led to social unrest and hammered industries in Pakistan’s $350 billion economy, as it navigates a tricky path to recovery under a $7 billion International Monetary Fund (IMF) program approved in September.
The HBL S&P Global Purchasing Managers’ Index will be a standardized economic indicator based on a survey of a diverse panel of industries.
It will be Pakistan’s first comprehensive manufacturing index and a welcome source of information for investors in a country where economic data is scarce.
The industries will be asked about their perceptions of current business conditions and future expectations and the index will be released on the first working day of each month, the companies said in a statement.
“The launch of Pakistan’s first ever PMI is a significant event contributing to the accessibility of timely and high-frequency data to track economic developments in Pakistan and support decision making by financial institutions, investors and businesses,” said Luke Thompson, Managing Director of S&P Global Market Intelligence, in a statement.
Muhammad Nassir Salim, President & CEO of HBL said the series will enhance investor confidence and transparency in Pakistan’s economy.


Saudi banks see record profits amid strong credit growth and debt market expansion

Updated 14 February 2025
Follow

Saudi banks see record profits amid strong credit growth and debt market expansion

RIYADH: Saudi Arabia’s top 10 listed banks recorded all-time high net profits in 2024 of SR79.64 billion ($21.23 billion), reflecting a 13.84 percent annual increase, according to data from the Saudi Exchange.

The robust performance was driven by strong lending growth, declining interest rates, and increased participation in debt markets.

Saudi National Bank, known as SNB AlAhli, led the sector, accounting for 26.6 percent of total banking profits at SR21.19 billion, followed closely by Al Rajhi Bank, which contributed 24.8 percent, reaching SR19.72 billion.

These two banks constituted about 51.4 percent of the sector’s total profits.

Among the banks with the highest annual growth, Arab National Bank topped the list with a 21.98 percent rise in net profits to SR4.97 billion. Bank AlJazira followed with a 20.69 percent increase, reaching SR1.23 billion, despite holding the smallest share of sector profits at 1.5 percent.

Total assets for the top 10 Saudi banks surged to SR4.21 trillion in 2024, marking a 13.6 percent increase year on year. SNB AlAhli held the largest asset base at SR1.1 trillion, followed by Al Rajhi Bank at SR974.39 billion, with both banks collectively accounting for 49 percent of the sector’s total assets.

Al Rajhi Bank recorded the fastest asset growth, expanding by 20.58 percent, followed by Saudi Investment Bank, which grew by 20.53 percent to reach SR156.67 billion.

Saudi Arabia’s banking sector is poised to sustain its profitability in 2025, bolstered by strong credit growth and corporate lending tied to Vision 2030 projects, according to an S&P Global report released in January.

The financial services agency projected that bank lending would expand by 10 percent, driven primarily by corporate loans as the Kingdom continues to invest heavily in large-scale economic initiatives.

The outlook remains positive as stable credit growth, supported by easing interest rates and a favorable economic environment, is expected to maintain banks’ profitability, with return on assets estimated to remain between 2.1 percent and 2.2 percent.

The report further highlighted that banks may increasingly turn to international capital markets to finance Vision 2030-related investments, ensuring a steady flow of liquidity. Meanwhile, mortgage lending is also anticipated to rise, supported by lower borrowing costs and demographic trends fueling demand for residential properties.

Saudi banks have also maintained a dominant presence in the stock market, leading Tadawul’s trading activity in 2024’s fourth quarter with a 17 percent market share, surpassing the materials and energy sectors.

Bank loans and main growth drivers

Saudi banks’ total loans and advances to customers grew by 14.41 percent year on year in 2024, reaching SR2.81 trillion, while deposits rose by 7.87 percent to SR2.68 trillion during the same period.

Al Rajhi Bank led in loan issuance, providing SR693.4 billion, a 16.8 percent increase from the previous year, followed by SNB AlAhli with SR654.25 billion and Riyadh Bank with SR274.4 billion.

With the Saudi riyal pegged to the US dollar, the Kingdom’s central bank, known as SAMA, mirrors Fed rate movements. After interest rates peaked at 6 percent in 2024, they began to decline in September, reducing borrowing costs.

According to SAMA, 11.28 percent of total bank loans — 21 percent of corporate loans— were allocated to real estate, a key enabler of the Kingdom’s infrastructure expansion.

Saudi Investment Bank posted the highest loan growth rate at 23.18 percent, reaching SR99.47 billion, followed by Saudi First Bank with a 20.10 percent increase to SR259.35 billion.

Deposits and funding strategies

Bank deposits for the top 10 Saudi banks reached SR2.68 trillion in 2024, with Al Rajhi Bank holding the highest share at SR628.24 billion, followed by SNB AlAhli at SR579.76 billion.

The strongest deposit growth was seen in Riyadh Bank, which expanded by 20.21 percent to SR306.42 billion, followed by Bank AlJazira with a 15 percent increase to SR108.19 billion.

As lending growth outpaces deposit expansion, Saudi banks have increasingly turned to the debt capital market to fund their credit expansion.

According to Fitch Ratings, Saudi banks have significantly increased their international debt issuance since 2020, aligning with their long-term growth strategies and foreign-currency funding needs.

The GCC banking sector is projected to issue more than $30 billion in US dollar-denominated debt in 2025, following a record $42 billion in 2024, according to Fitch.

This surge is primarily driven by nearly $23 billion in maturing debt, lower US interest rates, and sustained regional credit demand, particularly in Saudi Arabia and the UAE.

In 2024, GCC banks represented 18 percent of all emerging-market bank debt issuance in US dollars — a figure that rises to 36 percent when excluding Chinese banks. Strong global investor confidence, supported by stable oil prices projected around $70 per barrel in 2025, has further strengthened regional debt markets.

Short-term certificates of deposit emerged as a key instrument in GCC bank funding strategies, accounting for 21 percent of total debt issuance in 2024. 


Saudi Arabia leads GCC in US dollar debt and sukuk issuance, driving regional growth: Fitch

Updated 14 February 2025
Follow

Saudi Arabia leads GCC in US dollar debt and sukuk issuance, driving regional growth: Fitch

RIYADH: Saudi Arabia holds the largest share of the Gulf Cooperation Council’s debt capital market, with 44.8 percent of outstanding issuances, according to Fitch Ratings.

The US-based agency claims the GCC’s total DCM surpassed the milestone of $1 trillion at the end of January, reflecting a 10 percent year-on-year growth across all currencies. 

Saudi Arabia, alongside the UAE, boasts the most mature financial landscape, with both countries leading in sukuk and bond issuances. 

Fitch expects the Kingdom to play a pivotal role in driving US dollar debt and sukuk issuance in 2025 and 2026, as Saudi Arabia’s financial institutions and corporations increasingly turn to international debt markets to diversify funding sources, with banks alone anticipated to issue over $30 billion in US dollar-denominated debt this year. 

In a different report issued earlier this month, Fitch expected Saudi Arabia’s debt capital market to hit $500 billion by the end of 2025, fueled by economic diversification efforts under Vision 2030.

The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.

In its latest report, Fitch Ratings said: “Falling oil prices could lead to further DCM growth as lower government revenues could lead to increased borrowing.” 

It added that the anticipated reduction in US Federal Reserve interest rates in 2025 is expected to create a more favorable funding environment, with GCC central banks likely to follow suit. 

Saudi Arabia and the UAE, in particular, are set to benefit from this trend, further solidifying their positions as key regional and global financial hubs. 

GCC’s growing role in global debt markets 

The GCC accounted for a quarter of all emerging-market US dollar debt issued in 2024, excluding China, with Saudi Arabia, Turkiye and the UAE leading the way.. 

GCC US dollar DCM issuance surged by 65.8 percent year on year in 2024 to $133.4 billion, underscoring the region’s increasing reliance on international debt markets. New GCC fund passporting regulations could enhance DCM investment opportunities. 

Sukuk remained a key financing tool, making up 40 percent of the GCC’s total DCM as of January. Saudi Arabia and its regional counterparts contributed over 40 percent of global sukuk issuance, with GCC volumes soaring 43 percent year on year in 2024 to $87.5 billion. 

Notably, nearly 80 percent of Fitch-rated GCC sukuk are investment-grade, with the majority falling within the “A” category, while the remainder is mostly split between AA, BBB, BB, and B ratings. 

Most issuers are on “Stable Outlook”’ with the rest mainly on “positive.” Islamic banks played a crucial role in the sukuk ecosystem, both as issuers and investors, reinforcing the Kingdom’s leadership in Islamic finance. 

Challenges such as Shariah compliance complexities could impact sukuk structuring and issuance, Fitch warned. 

Saudi Arabia and UAE dominate ESG debt market 

The GCC’s environmental, social, and governance debt market surpassed $50 billion in outstanding issuances by the end of January, according to the ratings agency. 

Saudi Arabia and the UAE led this segment, with ESG debt representing 7.3 percent of the Kingdom’s total dollar debt issuance in 2024. 

ESG-debt issuance was also a sizable part — 17 percent — of dollar debt issuance in the UAE. 

“ESG debt could help issuers tap demand from ESG-sensitive international investors from the US, Europe and Asia,” Fitch said. 

Challenges and future prospects 

Despite its rapid expansion, the GCC’s DCM faces hurdles, including a bank-dominated investor base, a preference for bank financing over capital market funding, and limited local-currency debt issuance outside of Saudi Arabia. 

The Kingdom’s riyal-denominated market is the most developed in the region but “still has more room for growth,” according to Fitch. 

Kuwait became the GCC’s third-largest dollar debt issuer in 2024, with a total of $13.6 billion, led by banks. This is despite the absence of the public debt law, which would enable sovereign borrowing. 

Historically, US dollar issuances from Kuwait have been sporadic and rare, with only $11.8 billion issued between 2018 and 2023. “Kuwait’s new government plans to revise liquidity laws to facilitate capital market borrowing, but the timeline is uncertain,” Fitch said.
 


Oil Updates — crude to snap 3-week losing streak amid US tariff delays

Updated 14 February 2025
Follow

Oil Updates — crude to snap 3-week losing streak amid US tariff delays

SINGAPORE: Oil prices rose in Asian trade on Friday, poised to end three weeks of decline, buoyed by rising fuel demand and expectations that US plans for global reciprocal tariffs would not come into effect until April, giving more time to avoid a trade war.

Brent futures were up 59 cents, or 0.8 percent, at $75.61 a barrel by 3:22 p.m. Saudi time. US West Texas Intermediate crude gained 47 cents, or 0.7 percent, to $71.76. Both contracts were on track for weekly gains of about 1 percent.

US President Donald Trump on Thursday ordered commerce and economics officials to study reciprocal tariffs against countries that place tariffs on US goods and to return their recommendations by April 1.

“Positive development on the trade front in light of US tariff delays paves the way for some recovery in oil prices this morning, as the risk environment warms up to the prospects of further trade consensus being reached,” said Yeap Jun Rong, a market strategist at IG.

“However, gains in oil prices may seem limited as market participants have to digest the prospects of Russian supplies being brought back on the market amid potential Ukraine-Russia peace talks,” Yeap said.

A potential peace deal between Russia and Ukraine kept traders concerned that an end of sanctions on Moscow could boost global energy supplies.

Trump ordered US officials this week to begin talks on ending the war in Ukraine, after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky expressed a desire for peace in separate phone calls with him.

Russian oil exports could be sustained if workarounds to the latest US sanctions package are found, after Russian crude production rose slightly last month, the International Energy Agency (IEA) said in its latest oil market report.

Meanwhile, global oil demand has surged to 103.4 million barrels per day, a 1.4 million bpd increase year-over-year, analysts at JPMorgan said in a report on Friday.

“Initially sluggish, demand for mobility and heating fuels picked up in the second week of February, suggesting the gap between actual and projected demand will soon narrow,” JPMorgan said, adding: “Heating fuel use is expected to rise again. Additionally, soaring gas prices in Europe could prompt a shift from gas to oil, boosting demand.” 


Saudi Arabia, IMF lead talks on economic resilience at AlUla summit

Updated 13 February 2025
Follow

Saudi Arabia, IMF lead talks on economic resilience at AlUla summit

JEDDAH: Policymakers, economists, and industry leaders will gather in Saudi Arabia next week for the AlUla Conference for Emerging Market Economies, where discussions will focus on global economic shifts, challenges, and the growing influence of artificial intelligence in driving growth. 

The event, set for Feb. 16-17, is a joint initiative between Saudi Arabia’s Ministry of Finance and the International Monetary Fund. The annual conference aims to serve as a key platform for addressing structural changes in the global economy and their impact on emerging markets, according to the Saudi Press Agency.  

Saudi Finance Minister Mohammed Al-Jadaan said the forum would provide an opportunity for decision-makers to exchange insights on economic policies designed to navigate current challenges. 

“The conference will also showcase the latest regional and global economic developments, focusing on enhancing prosperity and resilience,” Al-Jadaan said. 

IMF Managing Director Kristalina Georgieva highlighted the significance of the event, noting that it comes at a time of rapid transformation. 

 “It will provide a vital platform for policymakers, the private sector, and key stakeholders to discuss how emerging economies can take advantage of the opportunities offered by current economic shifts, strengthen their competitiveness, and achieve strong growth driven by the private sector,” Georgieva said. 

A January report from Moody’s projected that oil production and large-scale investment projects would accelerate annual economic growth in the Middle East and North Africa by 0.8 percentage points in 2025. 

Saudi Arabia, which is leading economic diversification efforts under Vision 2030, has increasingly positioned itself as a hub for global economic dialogue. The AlUla conference underscores the Kingdom’s efforts to foster international cooperation amid shifting economic dynamics.